RHI Entertainment from $2.75 to 75 Cents in 5 Days

RHI Entertainment, Inc. (NASDAQ:RHIE) shares started Monday over $2.75 a share and by the end of Friday's session they managed to just close at 77 Cents.  That worked out to a 73% loss in one week after RHI enraged shareholders after Q3 2009 revenue fell 82% from the previous quarter in 2008.  RHI reported an Adjusted EBITDA loss of $24.2 million for the three months ended September 30, compared to a gain of $8.9 million in the third quarter of 2008.  All RHIE shareholders can do after hearing this is scratch their heads and ask -- now what?

RHI's productions have captured 458 Emmy Nominations, 105 Emmy Awards, 15 Golden Globe Awards and numerous Peabody, SAG, Christopher and Genesis Awards. In the past 13 seasons alone, 9 of the highest-rated US-Broadcast made-for-television movies or miniseries episodes were developed or distributed by RHI, including the top 3 during the same period. Our latest ratings success story, Tin Man, (a six-hour miniseries) was the most watched program in the history of its premiere network, the Sci Fi Channel, and the highest-rated miniseries on all of television in 2007.  Outstanding achievements no doubt, but that doesn't mean jack to Wall Street if you aren't making money hand over fist.

The downgrades for RHI Entertainment are just starting to come in after the earnings call this past week:

Robert Halmi, Jr., President and CEO of RHI Entertainment, Inc. had this to say in defense of such a poor earnings call:
"The third quarter was a difficult one for our business as our financial results were once again impacted by a challenging advertising environment. Last quarter we noted that we were seeing incremental improvement of market conditions and this continues to be the case. However, despite the signs of stabilization, we continue to experience weakness in market prices and sales volume. While customers remain cautious and are opting to defer some of their programming decisions, we do expect to deliver approximately 27 original films for the full year, the majority of which will be delivered in November and December."

Halmi said, "Against this backdrop of soft market conditions, we are focused on tight management of our operations and cost structure. We are continuing to look at ways to improve the profitability of our production business, monetize our film library and reduce our SG&A. We remain committed to generating free cash flow which we intend to use to de-lever our business, albeit at a significantly slower rate than we had originally forecast. Looking ahead, we remain confident in RHI's business model and believe our efforts to improve performance will pay dividends for our business in the quarters ahead." 

For now fellow Masters, RHIE is a falling knife, its tempting to buy shares when they are only 75 Cents but until Wall Street shows this company some love, its best to stay away.  Click here to read more about the Q3 earnings call, there's not much good in it, thus the stock price of 3 quarters.

Disclaimer: No positions in RHIE.